An interesting article in the Wall Street Journal: Japan’s Life Insurers May Go Cool on Foreign Debt (gated)
- Bank of Japan’s aggressive efforts to aid the economy have kept yields at extremely low levels at home, making foreign debt look more attractive
- In the first nine months of the year, Japanese insurers bought foreign bonds at the fastest pace in a decade
- But uncertainty over the outlook for the global economy has weighed on yields around the world, a factor that looks set to crimp buying for the time being
- “Yields are very low [globally]. That is having a direct impact on our investing,” said Toshihiko Yamashita, chief executive of the investment division at Meiji Yasuda Life Insurance Co., Japan’s second-largest life insurer by assets.
From the Wall Street Journal (gated):
- The yen’s sharp decline against the yuan is clobbering some Japanese companies operating in China
- The companies affected are those that pay wages and operating costs in yuan but earn revenue in yen by selling products or services in Japan
- The currency blow has been aggravated by skyrocketing labor costs in China, which nearly doubled in five years
It also makes note of the declining Japanese investment in China:
More: Weak Yen Pressures Japanese Firms Operating in China
New Zealand September trade balance data.
Trade balance, -1350m
- expected -625m, prior was -472m
- expected 3.50bn, prior was 3.52bn
- expected 4.20bn, prior was 4.00bn
New Zealand hoovering in the imports!
From Statistics New Zealand (bolding mine):
- The seasonally adjusted value of exported goods fell 3.0 percent, to $12 billion, in the September 2014 quarter
- Imports rose 3.7 percent, to $13 billion
- The fall in exports in the latest quarter follows a 7.5 percent fall in the June 2014 quarter
- Falls for both quarters were led by milk powder, butter, and cheese; and logs, wood, and wood articles
- “This is the first quarter since September 2013 where exports to Australia were greater than to China,” international statistics manager Jason Attewell said. “China’s rise to being our number one export market coincided with record dairy exports (driven by both prices and volumes) in the year to the September 2014 quarter.”
- The rise in imports was led by capital goods, mainly influenced by imports of large aircraft in the September 2014 quarter.
- Excluding these aircraft, seasonally adjusted imports showed little change, at 0.2 percent.
- The seasonally adjusted trade balance for the September 2014 quarter was a deficit of $1.0 billion, equivalent to 8.6 percent of exports.
- For the September 2014 month, import values increased $927 million (23 percent) compared with September 2013, while exports fell $203 million (5.3 percent)
- The trade balance for the September 2014 month was a deficit of $1.4 billion (37 percent of exports).
New York City police are being issued hand-held devices connected to crime and terrorism databases under a program funded in part by the $8.83 billion legal settlement with France’s BNP Paribas which this year pleaded guilty to violating U.S. anti-terrorism sanctions.
- The department will equip 6,000 squad cars with break-resistant tablets
- And each officer will receive a smartphone
- Part of a $160 million program paid for in part from the settlement
More at Bloomberg: NYC Police to Get Tablets Paid for With Funds From BNP
A report in the the Financial Times (gated, but can be read with a free registration): EU tells Britain to pay extra €2.1bn
- Britain has been told to pay an extra €2.1bn to the EU budget within weeks on account of its relative prosperity
- “A hefty surcharge”
- To compensate for its economy performing better than other EU countries since 1995, the UK will have to make a top-up payment on December 1
- France, meanwhile, will receive a €1bn rebate, according to Brussels calculations seen by the Financial Times
This should be fun. Tell me again, when does Britain leave the EU?
Bloomberg reports that “according to a person with knowledge of the matter”, Ireland’s smallest state-owned bank, Permanent TSB, failed European Central Bank stress tests under the adverse scenario being assessed by regulators
The report goes on to say:
- The bank faces a capital shortfall between 700 million and 800 million euros under an extreme case
- The shortfall would be the first Irish failure in Europe’s banking stress tests
More at Bloomberg
Good morning/evening/afternoon – welcome to Friday!
Any trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:
Due at 2145GMT from New Zealand is the September trade balance data.
- Trade balance, expected is -625m, prior was -472m
- Exports, expected is 3.50bn, prior was 3.52bn
- Imports, expected is 4.20bn, prior was 4.00bn
For the NZD/USd – 0.7875 is now resistance, but selling is coming in well ahead of that level at 0.7840/50 initially. Support …. well if you must be a buyer there is support initially around 0.7800 (and there are decent buy orders around there to be done) then a band from 0.7710 through 0.7750.
Forex news for October 23, 2014:
The euro got a lift from better PMIs in European trading but wasn’t able to continue to the upside. The top for the pair was 1.2677 just as US traders began arriving at their desks and it was a sideways/lower chop from there. Last at 1.2650 which is about right in the middle of the US range.
The action was in the yen crosses as better risk appetite and a report that the BOJ is giving up on its inflation targets that sent the yen spiraling. USD/JPY broke above the session high of 107.63 on the headlines and then continued all the way to 108.35 before ebola in NY fears sent it back down to 108.05. It’s in a delicate spot at the moment as the market weighs whether or not it cares about ebola.
Cable was in a 50-pip range from 1.6000 to 1.6050 and finishes right in the middle of it.
The volatility in USD/CAD wasn’t anywhere near the levels of yesterday although it took a quick dip down to 1.1208 before bouncing right back to 1.1240 early in US trading. It wasn’t able to get up to the 1.1260 levels from Asia-Pac trading and was generally tracking lower late in the day on better risk appetite.
Yet AUD and NZD continue to show no signs of bouncing on better vibes in stock markets. The kiwi was smashed by the CPI report yesterday and finishes near the lows of the day at 0.7822. The Aussie tried the upside in early US trading, touching 0.8806 but then sagged back to 0.8757 later, just above the Asian lows.
Gold took a hit down to $1225 as dissipating global fears and the end of Diwali sparked some selling but it bounced later on ebola buying.
Crude liked the Saudi headlines and that protected $80 in WTI and might be a very early sign of a bottom in crude.
Ryan had the story in the Wall Street Journal overnight here: Bank of Japan sees greater risk of inflation falling below 1% – WSJ:
- BOJ now sees a much bigger possibility of inflation slipping below 1%, pushed down by falling crude oil prices, according to people familiar with the central bank’s thinking
- BOJ recognizes that lower oil prices are ultimately good for the economy as they reduce living costs from imported food to gasoline, (but) is concerned about their effect over the shorter term.
Link to the (ungated) Journal article
The next BOJ policy meeting is on October 31. Current thinking is ‘no change’ from them, despite this talk about concern on the lower oil price and its impact on inflation.
(Gotta say… I reckon the BOJ is more concerned with core inflation rather than the volatile CPI with energy included. Just like other central banks.)
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